In 2006, personal bankruptcies decreased 70 percent from its 2005 high, but the rate is increasing this year. The American Bankruptcy Institute reports an increase of 51.3 percent in filings for May 2007 compared with May 2006.

The 2005 changes in the nation's bankruptcy laws require consumers to seek credit counseling before they can file for bankruptcy. But a recent study by the National Consumer Law Center found that the counseling did little good. And a report from the Association of Independent Consumer Credit Counseling Agencies (AICCCA) seems to bear that out.

The association said that of the approximately 400,000 people that its members have counseled since the law went into effect, more than 95 percent went on to file for bankruptcy.

"By the time our agencies see consumers for pre-bankruptcy counseling it is usually too late for any alternative solutions and the consumers have no choice but to file for bankruptcy," said David Jones, AICCCA president. "If consumers recognized earlier the warning signs of serious financial problems, they would have more choices for a successful solution."

To help, AICCCA has developed the following warning signs:

Living paycheck to paycheck -- A recent survey by American Payroll Association revealed that 65 percent of Americans report living paycheck to paycheck. Losing a job or a decrease in pay would put them in immediate financial difficulty and unable to pay some monthly bills. Unless a change can be made very quickly, their financial situations could become dire in a matter of months.

No savings cushion -- The savings rate for Americans is negative. We spend more than we earn and that habit means that any major financial outlay due to divorce, a large unexpected expense or car or home repair could begin a financial meltdown.

More than 20% non-mortgage debt to income ratio -- The Center for American Progress reports in its May Economic Snapshot that by December 2006 household debt rose to 132.4 percent of disposable income. For those spending more than 20 percent of net income to satisfy non-mortgage debt, a drastic change in spending behaviors is needed.

Making only minimum payments on credit cards -- More than forty percent of people with credit cards carry a balance. Paying only the minimum amount due means staying in debt much longer than is prudent and could indicate future financial trouble should income decrease or be interrupted by job loss or illness.

Not adequately insured -- Some studies suggest that 50 percent of bankruptcies involve medical debt. Without adequate insurance, the high cost of medical, home or car expenses can ruin personal finances

AICCCA urges consumers who are experiencing two or more of the above warning signs to seek help now.